Title:You Can Beat the Market: Estimating the Return on Investment for National Hockey League (NHL) Team Scouting using a Draft Value Pick Chart for the NHL

Abstract: Scouting is a major part of talent acquisition for any professional sports
team. In the National Hockey League (NHL), the market for scouting is set by
the NHLs Central Scouting Service which develops a ranking of draft eligible
players. In addition to the Central Scouting rankings, NHL teams use their own
internal scouting to augment their knowledge of eligible players and develop
their own rankings. Using a novel statistical approach we show in this paper
that the additional information possessed by teams provides better rankings
than those of Central Scouting. Using data from the 1998 to 2002 NHL drafts, we
estimate that the average yearly gain per team from their internal scouting is
between \$1.8MM and \$5.2MM. These values are consistent across the three
measures of player productivity that we consider: cumulative Games Played,
cumulative Time On Ice and cumulative Goals Versus Threshold where we have
aggregated these metrics across the first seven years post draft. We used this
time frame since teams generally retain rights to their draft picks for seven
years. Further, we find that no individual team outperformed the others in
terms of draft performance. One byproduct of our analysis is the development of
a Draft Value Pick Chart to assess the worth of an individual selection.